A big yawn. This week’s budget did not exactly inspire or excite. This undoubtedly reflects the Prime Minister and Chancellor’s strategy: avoid controversy and ensure stability.  But with the economy in the doldrums, was it enough? Is pragmatism in the face of stagnation a prudent strategy?
 
That’s not to say it was entirely bad news. The government is introducing ‘full expensing’ into the corporate tax system, a policy many free marketers believe will turbocharge business investment. They are liberalising pension rules – particularly by removing the cap on pot sizes – encouraging higher earners, such as doctors, back to work. 
 
The medical regulator will also start recognising approvals from the likes of the European Union, the United States and Japan – a deregulation that could save lives. This echoes the IEA’s February 2022 paper, Changing the Rules by Victoria Hewson, which called for mutual recognition to reduce trade barriers.
 


But the overall picture remains bleak. The economy is still smaller than before Covid while real household incomes have significantly fallen. We have the highest burden on tax and the level of state spending outside of wartime. The stealth tax rise – by freezing the income tax thresholds – will mean 3.2 million dragged into paying tax and 2.5 million more paying the 40p higher rate or 45p additional rate. We are stuck in a doom loop of high taxes and low growth. 
 
In response, the government is fiddling around the edges. They are throwing hundreds of millions at politically favoured local initiatives, creating expensive childcare entitlements unlikely to get many mothers back to work, and using taxpayer cash to speculate on risky technologies like carbon capture and storage.
 
For the IEA, this was, as usual for a major fiscal event, an extremely busy week. We have provided extensive analysis across the media and through our post-budget briefing with the TaxPayers Alliance.



On a personal note, I am humbled and excited to have begun as the IEA’s Director of Public Policy and Communications. I look forward to working with the team to help promote the IEA’s academic ideas for building a more prosperous and freer Britain. 

Matthew Lesh
Director of Public Policy and Communications, Institute of Economic Affairs

BUDGET DAY, BLOODY BUDGET DAY

Another Spring, another budget. On Wednesday, Chancellor Jeremy Hunt announced measures to 'get the economy growing'. But will his plan succeed? IEA spokespeople have provided analysis across major print and broadcast media.

In The Times, IEA Director General Mark Littlewood expressed cynicism that the Chancellor's plan will yield the necessary results. Commenting on the planned business tax hike, Mark wrote:

"The decision to jack up corporation tax by nearly a third may well end up amounting to an unfunded tax rise. The UK is one of only three countries in the developed world to increase taxes on profits over the past year or so. France, not often seen as a beacon of free-market entrepreneurialism, decided to reduce it."

Immediately after the Chancellor's announcement, Mark was on BBC Radio 2 giving his thoughts on the budget with Jeremy Vine. Listen here (from 1:38:38).



Mark also appeared on TalkTV to give his take. Mark described the budget as "pretty underwhelming" and concluded:
 
"Overall, the same trouble continues! We are overtaxed, the government is spending too much money and we are doing very little to get rid of red tape and regulation."  

Watch here (from 1:25:20).

On Friday, Mark appeared on BBC 5 Live to give his take on the budget. Listen here (from 22:33).



The IEA was also quoted in the ConservativeHome and Guido Fawkes round-up of think tank reactions to the budget.

IEA Editorial and Research Fellow Professor Len Shackleton argued that the Chancellor’s new childcare subsidies will “primarily benefit middle class families”. Len wrote about the issue for CityAM.  
 

IEA Head of Lifestyle Economics Christopher Snowdon also criticised plans to increase state subsidies for childcare in CapX. Christopher wrote:

“Why is childcare in Britain so incredibly expensive and how can we make it more affordable? Are the staff highly paid? Not particularly. Do nurseries make massive profits? Not really. Why, then, is this market so inefficient? Politicians refuse to ask these questions because the answer would require too much self-reflection. They have broken the childcare market with subsidies, over-regulation and feel-good policies over a period of many years."


 

IEA Press and Digital Officer Joseph Dinnage reacted in The Daily Express, appearing on page 2 of the print edition. Joseph was underwhelmed by the budget and commented:

"The move to freeze income tax thresholds until 2028 to fill a £55billion hole in public finances seems prudent – but the devil’s in the detail. The decision is expected to drag 3.2 million into paying tax, while a further 2.5 million are to pay 40p higher rate or 45p additional rate. The tax burden is at its highest since Attlee’s government and ideas like this perpetuate our high tax and low-growth malaise."

In The Telegraph, IEA Economics Fellow Andrew Lilico called the corporation tax rise and the introduction of full expensing "a tax distortion":

"Governments can find it useful to make taxes more complicated in the short-term – especially taxes that affect business investment, such as corporation tax. By introducing special short-term allowances governments can bring investment forward in periods when the economy would otherwise be expected to be performing poorly."

IEA DIGITAL

The IEA's YouTube channel is home to all of your digital free market needs. From lectures with leading thinkers to informative public policy explainers, we have it all. On this week's schedule, we had:



Rebuilding Britain... The IEA is delighted to have recently published 'Rebuilding Britain: Restoring confidence, competitiveness and compassion', authored by The Rt Hon The Lord Owen. In his paper, Lord Owen outlines his vision for making Britain more competitive to yield compassionate social outcomes.

From the Bank of England to the NHS, IEA Director General Mark Littlewood sat down with Lord Owen to discuss a variety of areas ripe for reform.



Swift Half with Snowdon... In this week's Swift Half with Snowdon, IEA Head of Lifestyle Economics Christopher Snowdon is joined by Dan Malleck, PHD, a Professor of Health Sciences at Brock University. They discuss the history of the alcohol prohibition movement and how public health advice should sometimes be taken with a pinch of salt.



IEA Podcast... On this week's IEA Podcast, IEA Director of Public Policy and Communictions Matthew Lesh spoke to Matthew Hodgson, co-founder and CEO of Element.io. They discussed the importance of encrypted messaging and risk posed by the Online Safety Bill to digital privacy.

IN THE MEDIA



Crash test... IEA Economics Fellow Julian Jessop made the front cover of The Spectator this week giving his thoughts on how the UK will navigate the coming era of economic uncertainty.


 

Flip flopping... Julian also told the The Financial Times that policy instability has hurt UK growth since 2016:

“It’s been a period of high uncertainty and companies have spent loads of time staying afloat rather than building their businesses.”


 

Politics Live... IEA Communications Officer Reem Ibrahim appeared on BBC Politics Live on Wednesday to discuss a variety of pressing issues. Commenting on the budget, Reem said:

“The Chancellor can use the word ‘growth’, but actually that means nothing if they’re implementing policies that are actively crushing growth.”


 

Un-free markets... IEA Research Associate Jamie Whyte has written in Conservative Home disputing claims that recent government policy represents free market fundamentalism:

“It cannot bear the slightest examination what the Conservative government has actually done over the last 13 years. No government since 1979 has been less committed to free markets.The state now collects more tax (in pounds and as a percentage GDP) than it did in 2010. Indeed, the tax burden is now higher than it has been in 70 years."



Face the music... In City AM, IEA Energy Analyst Andy Mayer was quoted discussing criticism of energy companies for ramping up fossil fuel production, despite promising to use greener energy sources. Andy argued that transitioning away from fossil fuels would make little sense when demand for them is so high:

“Without security of supply prices rise. If energy prices rise all activity including decarbonisation becomes more expensive and slows down. The companies deserve to be criticised for their prior incaution with words, not their current wisdom with new investments”

INITIATIVE FOR AFRICAN TRADE AND PROSPERITY

The Initiative for African Trade and Prosperity continues to take 2023 by storm — sponsoring some fantastic events with the Network for a Free Society!


                 Trade and Economic Development Summit - SOLE - Yambio, South Sudan

The Students' Organisation for Liberty and Entrepreneurship bought together 611 young people in Yambio, the capital of Western Equatoria, to discuss supporting entrepreneurship. Over 350 copies of the IEA’s primer ‘An Introduction to Trade and Globalisation,’ by Dr Eamonn Butler, were given to attendees.


                                                Student Event - Liberty Sparks - Tanzania 

Liberty Sparks held a student event at Ardhi University, located just north of the nation's capital. At the event, 189 attendees learned about trade, globalisation and the benefits of the African Continental Free Trade Area.

The IATP has also released some fascinating new videos on its YouTube channel!



In this video, Martin Van Staden, a South African legal expert, breaks down the fundamental components of a strong economy and highlights the importance of property rights.

IEA GLOBAL

On Thursday, IEA Head of Foundations and Trusts Jack Confrey, represented EPICENTER in Santa Cruz de Tenerife at the launch of the Annual Economic Freedom Index of Spanish Cities (ILECE 2023) produced by the Foundation for the Advancement of Liberty (Fundación para el Avance de la Libertad).



The index shows that Santa Cruz de Tenerife is the economically freest city in Spain for 2023. Santa Cruz benefits from low municipal taxes, i.e. a very competitive construction tax, and serious efforts to lighten the bureaucratic burden for citizens and companies alike. It is noteworthy that none of the three most populous Spanish cities, Madrid, Barcelona and Valencia, are in the top 40.

Jack spoke about the benefits of economic freedom and how indexes such as ILECE 2023 provide greater transparency in the differences of economic policy by shedding light on important indicators such as the tax burden, the size of local governments and red tape.

To read the index click here and find out more about the work of Fundación para el Avance de la Libertad click here.

The IEA's partners at the Afghanistan Legal Studies Organisation (AELSO) have been distributing IEA books translated into Dari and Pashto — including an ‘Introduction to Entrepreneurship’ and ‘Introduction to Economic Inequality'. 
 

Thanks to AELSO’s work, students across Afghanistan are able to continue learning about markets. So far, over 200 have attended seminars and many more have access through all major bookstores and most libraries in the country.

VINSON CENTRE 

Our partners at the Vinson Centre for the Public Understanding of Economics and Entrepreneurship will be hosting a seminar at the IEA. Dr Lawrence Haar, Senior Lecturer in Finance at the University of Brighton, will be delivering a seminar at 2 Lord North Street on Wednesday 22nd March, entitled 'The Fiscal Incidence of Renewable Energy Support'.

Click the flyer below for more details.

STUDENTS AND TEACHERS



Join the IEA's internship programme!... We are now welcoming applicants. From editorial work to aiding our operations team, there are a variety of opportunities on offer for sixth form and university students. Want to work for the UK's original free-market think tank? Click here to find out more and submit your application.

Our current cohort of talented interns put together a video providing an insight into what you can expect, which you can watch here.

Applications are still open for Camp Vinson, which will now run from 26-30 June at St Antony’s College, Oxford! You can submit applications until Friday 31 March for this exclusive residential programme run in conjunction with the IEA, Initiative for African Trade and Prosperity, Vinson Centre for the Public Understanding of Economics and Entrepreneurship and the Institute of International Monetary Research.

Find out more and apply here.



And a reminder that applications for our Future Thought Leader Programmes for sixth-formers and undergraduates are now open. There will be two weeks for sixth formers in April, and one in July. The undergraduate programmes will take place in July and August.

You can find out more information on the programmes and how to apply here.